JEFF PRESTRIDGE: Is it lucky seven for new People’s Trust, as it targets 7% annual return for seven years?

Investment trusts have been around since time immemorial. In fact, since 1868 when Foreign & Colonial was formed, the world’s first.

Although these vehicles have had their horror moments – most notably the meltdown of so-called split capital trusts in the early 2000s – most have served investors admirably, providing respectable returns from a diversified portfolio of shares.

Indeed, the £3.3 billion Foreign & Colonial still chugs along to this day and has built an impressive track record of dividend growth. It has increased its annual dividend every year for the past 46, a big comfort to those who partly rely on the income to safeguard their standard of living. Only five rival trusts have longer records of sustained income growth.

Changed days: Until recently, investment trusts were in the shadow of their unit trust counterparts

Until recently, investment trusts were in the shadow of their unit trust counterparts, primarily because they did not have the marketing budgets to compete, nor the tools (commission) to persuade financial advisers to recommend them.

Yet the investment world is changing and with it the popularity of investment trusts. A greater focus on charges has highlighted the low ongoing fees levied by many trusts. Online investment platforms have also made it easier for investors to buy shares in these vehicles.

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Another mark of the industry’s progress is the imminent launch of The People’s Trust, an investment fund with a twist or two. New trusts are few and far between.

It is the brainchild of Daniel Godfrey who knows the City and investment funds industry inside out. As well as working for a number of City firms, Godfrey has headed up two powerful investment fund lobby groups.

Despite the City-speckled curriculum vitae, Godfrey is not a defender of all the City’s ways. Far from it. He is a fierce critic of executive pay, describing it as ‘dysfunctional’ and in dire need of overhaul. He is also of the view that the City is far too short-termist and not caring enough about the businesses they invest in.

He also believes the investment funds industry should be more transparent about the charges it levies on the funds which many people use as the basis of their pension or Isa.

It is a belief that got him the boot from the Investment Management Association. A badge of honour. The People’s Trust has been an idea of Godfrey’s for many a year. But only the raising of £100,000 last year from some 2,400 ‘founders’ through a crowdfunding exercise enabled him to put the idea into practice.

The trust reflects many of Godfrey’s City beliefs. So there will be an emphasis on generating long-term absolute returns for investors rather than promising from day one to outperform a particular stock market index. An annual return of seven per cent per annum for seven years is the target.

The fund’s assets will be parcelled out to five investment managers from leading City companies, all renowned for their particular specialisms. To dovetail with the trust’s investment target, they have been engaged on seven-year contracts.

There will be no chopping and changing of managers if the short- term numbers do not look good although advisers Willis Towers Watson will oversee how they are faring. A small slice of the fund’s assets will be used to back social projects, primarily through Big Issue Invest.

On executive pay, Godfrey has agreed to waive half his annual salary of £275,000 for the first two years, or until the trust’s assets top £250 million (it is hoping to raise £125 million initially).

Part of his pay will be in shares, thereby aligning his financial interests with the trust’s future fortunes. The non-executives are waiving their entire fees in the first two years or until the trust grows to £250 million.

This fund will not be to everyone’s taste. It will not appeal to income seekers – there is no specific focus on income return. They will be better off looking elsewhere. It is also not the cheapest with a projected ongoing annual charge of a touch over one per cent.

Others, meanwhile, may feel nervous about investing in an unknown entity – or consider the focus on a seven-year time horizon too long. There are also existing investment trusts such as Witan which already have a proven track record of using a pool of managers to good effect.

But it is different, has a conscience and for those reasons it deserves to succeed. If you want to get in at the start, you have until October 10 to act.